Office Depot
“We’re a young company, our doors first opened in 1986. As a $12 billion company,
our goal is to be the most compelling place to work and shop, and on that basis I’m
convinced we’ll be a compelling place to invest.”
— Bruce Nelson, CEO Office Depot
Background
Office Depot is a gorilla in its
market space. Today the world’s
largest seller of office products, the
company opened its first store in
Fort Lauderdale, Florida in October
1986. Within five years another
173 stores were open for business.
In January 1998, the company
launched its first public Web site,
and in August of that same year
completed its acquisition of Viking
Office Products, securing Office
Depot’s position as the leading
provider of office products and
services worldwide. By the end of
2000, there were 1,020 stores in the
United States, Canada, and nine
other countries as well as eleven
Web sites established in nine
countries.
Office Depot takes orders through
virtually every channel including
stores, catalogs, phone, fax, direct
Copyright © 2001 Cisco Systems, Inc. All Rights Reserved.
EXECUTIVE SUMMARY
BACKGROUND
Founded in 1986, Office Depot is the
world’s largest seller of office products
and an industry leader in every
distribution channel, including stores,
direct mail, contract delivery, the Internet,
and business-to-business electronic
commerce.
CHALLENGE
With business growing exponentially
across multiple sales channels, Office
Depot needed a technology strategy to
help manage its growing business
efficiently, effectively, and profitably.
SOLUTION
Through its strategic relationship with
Cisco, Office Depot has begun to
implement a robust, enterprise-wide
network infrastructure to power an e-
business model that will enable cross-
functional collaboration and 24/7 access
to real-time information.
RESULTS
Office Depot is reaping rewards in
reduced cycle time, more scalable, cost
effective business processes, and
improved accountability across its
enterprise – the latter yielding more
effective capital spending while still
providing for strong business growth.
sales, and the Internet. Its national
business-to-business delivery network
includes over 2,000 trucks, 25 domestic
delivery centers, more than 60 local sales
offices, eight regional call centers, a state-
of the-art public Internet site and a
customized Internet site for corporate
customers.
While most would consider it primarily a
retail company, Office Depot is actually a
very complex business model that employs
an equally complex IT infrastructure.
Given the high tech methods Office Depot
uses to service its customers and manage
inventories, the company has been
uniquely innovative in the development of
its densely interwoven sales channels.
Office Depot’s company-wide philosophy
mandates that customer satisfaction is
inherent in everything it does. The
company fosters an environment where
recognition, innovation, communication,
and the entrepreneurial spirit of each
employee are encouraged and rewarded.
Strongly committed to maintaining its
leadership edge, Office Depot is focused on the future with the
goal of becoming a totally integrated, global IT organization,
completely connected via networked systems.
Challenge
On the Web since 1995, Office Depot has carved an e-
commerce presence now second only to Amazon.com. In
seeking a technology strategy to support its rapidly expanding
business, Office Depot began looking for ways to internalize the
power of the Internet.
The first challenge was simply keeping up with ever increasing
transaction volumes. Tracking all its inventories, invoices,
outstanding bills, and custom sales arrangements is a tedious but
critical task. In addition, Office Depot needed a way to
disseminate timely and accurate information globally to its more
than 48,000 employees worldwide.
The company wanted a means to truly empower its workforce
while at the same time increasing accountability and ownership.
It needed an efficient network that would inspire cross-
departmental collaboration and allow for the development of
customized business accounting and analytical tools.
As Bruce Nelson, Chief Executive Officer of Office Depot,
explained: “Through technology we can give our employees
access to more comprehensive information more quickly than
we could in the past. And we can deliver it at a lower cost.
Technology provides the power to make better decisions more
quickly and cost effectively by eliminating the steps and
reducing the errors that are inevitable with all paper-based,
manual processes.
“Our ultimate goal is to streamline our entire business and
rededicate the savings to improve customer service.”
Solution
Initially, Office Depot chose Cisco to provide the bandwidth and
universal connectivity needed to move toward a more robust,
24/7 enterprise-wide infrastructure. “Our initial relationship with
Cisco was simply that they were our business partner, providing
infrastructure components that enabled us to grow our company
from a network perspective,” said Bob Conklin, who manages
Office Depot’s entire technology infrastructure. “Now we've
raised that relationship up a notch. They are engaged with us at
both executive and operating levels applying techniques and best
practice solutions.”
Copyright © 2001 Cisco Systems, Inc. All Rights Reserved.
Building that relationship began with Cisco visiting Office
Depot and sharing with senior management the advantages and
processes of what Cisco calls the “virtual close” – the ability to
close the books on a company within 48 hours. It was this
unique application that caught the attention of Office Depot
executives.
“The real economic value of a virtual close comes from
transforming operating processes such that there is continuous
interaction across a company's business processes,” said Charlie
Brown, Executive Vice President, CFO. “The Internet-enabled
processes we’re putting in place create an increased level of
financial and business integration and a more accountable
culture within the company. It's the linkage that’s truly
valuable.”
According to Rob Koch, Vice President of Corporate Finance,
Office Depot’s first initiative after meeting with Cisco was to
pursue real time access to reliable, pertinent business
intelligence across departments. Next was to set up a simple,
intuitive electronic process for integrating controls and capturing
metrics within the Finance Department, which requires input
from multiple sources to generate key reports. The third step
was to implement methods to enable front line accountability
and ownership.
From a finance perspective, Office Depot wanted to ensure more
accurate and timely data, which would allow for more reliable
forecasting and eliminate unwanted surprises. The new network
solution would also greatly enable cross-functional collaboration
and the sharing of ideas and analyses. By moving to an Intranet
business model, Office Depot expected an increase in efficiency,
accuracy, and accessibility.
Results
Today, the Internet is a value-added enabler for Office Depot’s
entire enterprise. In addition to harnessing its power to ensure
continued e-commerce dominance, the company began applying
Internet-enabled processes internally, as well. To accomplish
this, the company’s mainframes have taken on an expanded role
as servers fueling Internet-based applications, with Cisco gear
helping balance the additional traffic. “The idea is to reengineer
everything we possibly can to create efficiencies and
accountability across the business,” explained Bill Seltzer,
Executive Vice President and Chief Information Officer.
“With the networking capability now in place, we’re seeing a
massive increase in cross functional partnerships and
collaboration,” Koch said. “We’ve been able to unlock content
from what had been very proprietary storage structures. We’re
reducing complexity by using the Web to enhance workflow.”
Cathy Kollman, Director of Accounts Payable, is experiencing
the results of this first hand. “In our Accounts Payable
organization alone the cost benefits will outweigh the
technology investment through reduced headcount and
streamlined processes.”
Office Depot has implemented a powerful Internet-based system
called Total Document Management (TDM). With TDM,
invoices are sent to a central outsource location where they are
scanned into the network, drastically reducing the touch points
of document handling. This has had a profound impact on
internal reimbursement processes, reducing cycle time from four
weeks down to 72 hours. Furthermore, end users have complete
visibility into the life cycle of an invoice, from receipt through
payment.
In the near future, Office Depot plans to have all invoicing
handled through TDM, from the largest accounts down to
contracted maintenance organizations. This almost
instantaneous system of document management has enabled the
Finance department to virtually eliminate its dependence on
week-old reports in favor of daily updates available throughout
the network.
Office Depot has reduced transaction costs by eliminating many
of its paper transactions. And the connectivity delivered through
the network infrastructure allows the company to outsource
much more than was previously possible.
Lance Cook, Senior Manager, Business Analysis, took a fresh
approach to empowering the financial organization. “We meet
with business accountants, analysts, and others from the
financial group and take them through a training and skills
development process where we actually teach them how to build
the tools our group builds,” Cook explained. “This raises the
technical skill set of the entire Finance organization, allowing
them to customize the online tools at their disposal while
teaching them practical project techniques.
“Those closest to the customer now have more control over how
situations are handled, streamlining the process and reducing
costs,” Cook added. “Because they’re in the trenches, they know
what needs to be done. By increasing their technical skill set and
Copyright © 2001 Cisco Systems, Inc. All Rights Reserved.
capitalizing on the robust network infrastructure, we enable
them to reengineer these processes themselves.”
The network also augments Office Depot’s real-time
management of inventories, an important factor in managing the
business cost-effectively. “When an order comes in on our Web
site or through a call center, and when we perform ongoing
replenishment, the transaction hits our core supply chain
applications and environments,” Conklin said. “It’s not a
separate Web front end that sends a batch transaction and later
depletes the inventory or alerts the supply chain.” This
instantaneous inventory management improves Office Depot’s
supply chain processes dramatically.
Using the network to manage business case justification of
capital and discretionary spending is another major win for
Office Depot. “Because accountability is built into the system,
we’ve significantly increased our spending effectiveness,”
Brown said. “Today, there is also increased communication
across the company before projects are launched and much
better alignment with Office Depot’s business needs.”
Fundamentally, the network has enabled Office Depot to begin
developing a highly accountable and empowered grassroots
culture. The automation of the mundane has become the value
added, freeing employees from tedious activities and
transferring high value activities back to the company. “The
payback is that people feel connected to the mission here,” said
Dan Depace, Director of Sales Accounting. “We’re seeing many
ideas coming forward on how to put more and more things on
the Web.”
Those suggestions are coming from the CEO, as well. “Bruce
provides great leadership and encouragement for exploiting the
technology,” Brown said. “He’s often heard asking: ‘Have you
thought about putting that on the Web?’ He realizes the many
benefits in becoming a Web-enabled company and challenges
everyone, starting with his direct reports, to help Office Depot
become a Web-enabled company. His leadership is changing the
culture.”
“In addition to the benefits of building more effective processes,
we have also increased our ability to recruit highly talented
people because they want to be part of an innovative company,”
Brown added. “And we can make, as Jack Welch says, a very
large company seem small again.”
One of Office Depot’s next initiatives is to complete rolling out
e-learning platforms for all employees while continuing toward
 the goal of instantaneous dissemination of information across its “Cisco has played an active role in getting us to think in terms of
48,000 employees. Whatever may come, Office Depot is not an e-business model, to raise questions about our readiness for
waiting to react. it,” he added. “They’ve helped by sharing their own experiences

“You have to find ways to relentlessly improve your business with us. In the truest sense, we collaborate together and the

and technology is an enabler that lets you do that,” Nelson said. results speak for themselves.”
“It gives your employees the ability to focus on the important
issues.

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